Valmont Reports Fourth Quarter and Full Year 2022 Results

Rhea-AI Summary

Valmont Industries (NYSE: VMI) reported record fourth-quarter 2022 net sales of $1.1 billion, a 17.5% increase year-over-year. Operating income surged 116.2% to $109.7 million, marking 9.7% of net sales. Diluted EPS rose 48.8% to $1.86, despite a $33.3 million loss from divesting the offshore wind energy structures business. For the full year, net sales hit $4.3 billion, up 24.1%, with diluted EPS at $11.62. Valmont anticipates 2023 net sales growth of 4%-7% and diluted EPS between $14.70 and $15.25. The company's robust financials reflect solid demand across its Infrastructure and Agriculture divisions.

Positive

• Fourth quarter net sales reached $1.1 billion, a 17.5% increase year-over-year.
• Operating income increased 116.2% to $109.7 million, representing 9.7% of net sales.
• Diluted EPS for Q4 was $1.86, a 48.8% increase from the previous year.
• Full year net sales totaled $4.3 billion, a 24.1% increase versus FY 2021.
• The company anticipates net sales growth of 4% to 7% for 2023.

Negative

• Incurred a $33.3 million loss from the divestiture of the offshore wind energy structures business.
• GAAP tax rate for Q4 was 40.6%, higher than adjusted rate of 27.4%.

Achieves Record Results and Provides Positive 2023 Full Year Net Sales and EPS Guidance

OMAHA, Neb.--(BUSINESS WIRE)-- Valmont Industries, Inc. (NYSE: VMI), a global leader that provides vital infrastructure and advances agricultural productivity while driving innovation through technology, today reported financial results for the fourth quarter and fiscal year ended December 31, 2022.

Fourth Quarter 2022 Highlights (all metrics compared to Fourth Quarter 2021 unless otherwise noted)

• Net Sales of $1.1 billion increased 17.5%, a fourth quarter record
• Operating Income increased 116.2% to $109.7 million, or 9.7% of net sales (increased 32.9% to $113.7 million or 10.1% adjusted¹) compared to $50.8 million or 5.3% of net sales ($85.6 million or 8.9% adjusted¹)
• Diluted Earnings per Share (“EPS”) of $1.86 ($3.57 adjusted¹) compared to $1.25 ($2.73 adjusted¹)
  • GAAP EPS includes a pre-tax loss of $33.3 million or $1.54 per diluted share from the divestiture of the offshore wind energy structures business
• Generated strong operating cash flows of $142.5 million
• Repurchased 60,200 shares of company stock for $20.0 million
• Announced and completed the divestiture of the offshore wind energy structures business, Valmont SM^TM, which had been reported in the Renewable Energy product line in the Infrastructure segment and is now reported as “Other”
• Incurred GAAP tax rate of 40.6%; adjusted tax rate was 27.4% excluding the loss generated from the divested offshore wind energy structures business which provided no tax benefit

Full Year 2022 Highlights (all metrics compared to Full Year 2021 unless otherwise noted)

• Record Net Sales of $4.3 billion, an increase of 24.1%
  • Strong sales growth as Infrastructure grew to a record $2.9 billion and Agriculture grew to a record $1.3 billion, including 17.6% growth in agriculture technology products and services
• Operating Income increased 51.1% to $433.2 million, or 10.0% of net sales (increased 34.6% to $449.7 million or 10.3% adjusted¹) compared to $286.8 million or 8.2% of net sales ($334.0 million or 9.5% adjusted¹)
  • Higher operating income was led by favorable pricing and volume growth in both Infrastructure and Agriculture
• Diluted EPS of $11.62 ($13.82 adjusted¹) compared to $9.10 ($10.92 adjusted¹)
• Generated strong operating cash flows of $326.3 million, a significant improvement compared to 2021, driven by higher net earnings and improvements in working capital performance
• Capital expenditures were $93.3 million, including approximately $30.0 million for strategic investments including a new concrete utility structures facility in Bristol, Indiana and irrigation capacity expansions in Brazil and Dubai
• Deployed $39.3 million of cash to acquire a majority interest in ConcealFab, accelerating the Infrastructure segment’s global telecommunications growth strategy
• Returned $86.3 million of capital to shareholders through dividends of $45.8 million and share repurchases of $40.5 million
• Achieved Return on Invested Capital of 12.9% (13.3% adjusted¹)
• Year-end backlog of approximately $1.7 billion, an increase of 2.1% since the end of fiscal 2021, reflecting sustained pricing and continued strong market demand across the portfolio
• Realigned financial reporting from four reportable segments to two: Infrastructure and Agriculture, to elevate focus on market growth strategies, capital allocation, and technology development

¹Please see Reg G reconciliation to GAAP measures at end of document

Key Financial Metrics

Fourth Quarter 2022		GAAP								Adjusted1
		14 weeks			13 weeks						14 weeks			13 weeks
(000's except per share amounts)		12/31/2022			12/25/2021						12/31/2022			12/25/2021
		Q4 2022			Q4 2021			vs. Q4 2021			Q4 2022			Q4 2021			vs. Q4 2021
Net Sales		$	1,131,516		$	963,278		17.5	%		$	1,131,516		$	963,278		17.5	%
Operating Income			109,716			50,754		116.2	%			113,734			85,555		32.9	%
Operating Income as a % of Net Sales			9.7	%		5.3	%					10.1	%		8.9	%
Net Earnings			40,332			26,856		50.2	%			77,256			58,751		31.5	%
Diluted Earnings Per Share		$	1.86		$	1.25		48.8	%		$	3.57		$	2.73		30.8	%
Average Shares Outstanding			21,656			21,523						21,656			21,523
Full Year 2022		GAAP								Adjusted1
		53 weeks			52 weeks						53 weeks			52 weeks
(000's except per share amounts)		12/31/2022			12/25/2021						12/31/2022			12/25/2021
		FY 2022			FY 2021			vs. FY 2021			FY 2022			FY 2021			vs. FY 2021
Net Sales		$	4,345,250		$	3,501,575		24.1	%		$	4,345,250		$	3,501,575		24.1	%
Operating Income			433,249			286,785		51.1	%			449,725			334,049		34.6	%
Operating Income as a % of Net Sales			10.0	%		8.2	%					10.3	%		9.5	%
Net Earnings			250,863			195,630		28.2	%			298,139			234,811		27.0	%
Diluted Earnings Per Share		$	11.62		$	9.10		27.7	%		$	13.82		$	10.92		26.6	%
Average Shares Outstanding			21,580			21,493						21,580			21,493

“The Valmont team delivered another strong quarter of continued growth and outstanding performance, achieving record net sales and further margin improvement year-over-year,” said Stephen G. Kaniewski, President and Chief Executive Officer. “These results were driven by a continued commitment to our disciplined pricing strategies, robust demand for our industry-leading products and services, and solid execution by our global teams. Ongoing investments in grid reliability, transportation infrastructure, 5G buildouts, and the clean energy transition are leading to a multi-year runway for growth across our Infrastructure businesses. Continued positive agriculture market fundamentals are driving demand for our irrigation products and technology solutions as elevated commodity prices, global drought conditions and ongoing food security concerns are all supporting market demand. I am very pleased with our ability to effectively manage our operations to best serve our customers and meet this broad-based demand. Our results further demonstrate the value of our long-term strategy led by sustainable growth initiatives across our businesses, operational excellence and price leadership.”

Kaniewski added, “Reflecting on 2022, our full-year results exceeded the goals we set at the beginning of the year, despite a continued volatile environment, demonstrating the resiliency and relentless focus of our global team. We achieved record net sales of $4.3 billion and delivered record diluted earnings per share of $13.82 on an adjusted basis, an increase of 26.5% year-over-year. We significantly improved return on invested capital through strategic capital allocation and improved working capital performance, which also contributed to a substantial improvement in free cash flow. We continue to profitably grow and perform at a high level, leveraging the strength and sustainability of our Valmont business model. I am extremely proud of our team of more than 11,000 employees around the world and want to congratulate and thank them for their dedication, hard work, and execution. Together, we remain committed to providing our customers with vital infrastructure products and solutions to advance agricultural productivity with an unwavering focus on employee safety and increasing shareholder value."

Fourth Quarter 2022 Segment Review

Infrastructure (67.6% of Net Sales)

Products and solutions to serve the infrastructure markets of utility, renewable energy, lighting, transportation, and telecommunications, and coatings services to preserve metal products

Sales of $771.3 million grew 15.0% year-over-year with double-digit sales growth across all product lines, net of 2.7% unfavorable foreign currency translation impacts. Higher sales were driven by favorable pricing globally, higher volumes, notably in the Lighting and Transportation and Renewable Energy product lines, and sales from the ConcealFab acquisition.

Operating Income improved to $99.6 million or 13.0% of net sales compared to $77.3 million or 11.6% of net sales ($77.8 million or 11.6% adjusted¹) in 2021, driven by favorable pricing and higher volumes.

Agriculture (29.4% of Net Sales)

Center pivot and linear irrigation equipment for agricultural markets, including parts and tubular products; advanced technology solutions for precision agriculture

Sales of $335.1 million increased 21.1% year-over-year, with global sales growth led by higher average selling prices of irrigation equipment and higher volumes, primarily driven by continued strength in North America and Brazil, and higher sales of technology products and services.

Operating Income improved to $40.5 million, or 12.2% of net sales ($44.5 million or 13.4% adjusted¹) compared to $28.6 million or 10.5% of net sales ($33.0 million or 12.1% adjusted¹) in 2021. The benefit of higher average selling prices and additional volume leverage was partially offset by higher SG&A, including incremental R&D expense for technology investments.

Other (3.0% of Net Sales)

Offshore wind energy structures business

Sales of $33.3 million grew 44.1% year-over-year and operating income was $1.4 million compared to an operating loss of $31.3 million in 2021. As previously announced, the divestiture of the offshore wind energy structures business was completed in December 2022.

Balance Sheet, Liquidity, and Capital Allocation

The Company generated full-year 2022 operating cash flows of $326.3 million through strong earnings and effectively managing working capital while supporting strong sales growth. At the end of 2022, cash and cash equivalents were $185.4 million. Valmont purchased $20.0 million of company stock in the fourth quarter and $81.4 million remains on the current authorization with no expiration.

Providing 2023 Full Year Financial Outlook and Key Assumptions

Based on an unchanged positive outlook for underlying business growth across the portfolio that was highlighted last quarter, the Company is providing its 2023 full-year net sales and diluted earnings per share outlook and key assumptions for the year.

• Net Sales Growth (vs. PY) of 4% to 7%, which reflects the divestiture of the offshore wind energy structures business
• GAAP Diluted Earnings per Share of $14.70 to $15.25 ($15.35 to $15.90 adjusted¹)
• Effective tax rate of 28% to 29%, primarily due to expected geographic mix of earnings
• Minimal expected foreign currency translation impact to net sales
• Capital expenditures expected to be in the range of $105 to $125 million to support strategic growth and digital transformation initiatives
• Continued elevated inflation, stabilizing raw material costs and ongoing R&D investments

Kaniewski continued, “We are excited and confident about the opportunity to drive multi-year revenue and profitability growth by capitalizing on the strong market drivers across our businesses and continuing to support our customers. These factors, along with our proven track record of execution and a backlog of $1.7 billion, give us confidence in our 2023 outlook. The long-term need for critical infrastructure investment globally is driving sustainable demand across our Infrastructure businesses. Favorable agriculture economics and market trends globally, a strong international project pipeline and increasing adoption of innovative technology solutions are providing momentum for our Agriculture business. Our balance sheet remains strong, giving us the flexibility to execute on our strategies. We enter this year from a position of strength with a talented team and are investing in the future to meet the needs of our customers and deliver value to our stakeholders.”

A live audio discussion with Stephen G. Kaniewski, President and Chief Executive Officer, and Avner M. Applbaum, Executive Vice President and Chief Financial Officer, will be accessible by telephone on Thursday, February 23, 2023 at 8:00 a.m. CST by dialing 1-877-407-6184 or 1-201-389-0877 (no Conference ID needed), or via webcast by pointing browsers to this link: Valmont Industries 4Q and Full Year 2022 Earnings Conference Call. A slide presentation will simultaneously be available for download on the Investors page of valmont.com. A replay of the event can be accessed three hours after the call at the above link or by telephone at 1-877-660-6853 or 1-201-612-7415. Please use access code 13734761. The replay will be available through 10:59 p.m. CST on March 02, 2023.

About Valmont Industries, Inc.

For over 75 years, Valmont^® has been a global leader in creating vital infrastructure and advancing agricultural productivity. Today, we remain committed to doing more with less by innovating through technology. Learn more about how we’re Conserving Resources. Improving Life.^® at valmont.com.

Concerning Forward-Looking Statements

This release contains forward-looking statements, within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are based on assumptions that management has made in light of experience in the industries in which Valmont operates, as well as management’s perceptions of historical trends, current conditions, expected future developments and other factors believed to be appropriate under the circumstances. As you read and consider this release, you should understand that these statements are not guarantees of performance or results. They involve risks, uncertainties (some of which are beyond Valmont’s control) and assumptions. Although management believes that these forward-looking statements are based on reasonable assumptions, you should be aware that many factors could affect Valmont’s actual financial results and cause them to differ materially from those anticipated in the forward-looking statements. These factors include among other things, the continuing and developing effects of the pandemic including the effects of the outbreak on the general economy and the specific economic effects on the Company’s business and that of its customers and suppliers, risk factors described from time to time in Valmont’s reports to the Securities and Exchange Commission, as well as future economic and market circumstances, industry conditions, company performance and financial results, operating efficiencies, availability and price of raw material, availability and market acceptance of new products, product pricing, domestic and international competitive environments, geopolitical risks, and actions and policy changes of domestic and foreign governments. The Company cautions that any forward-looking statement included in this press release is made as of the date of this press release and the Company does not undertake to update any forward-looking statement.

VALMONT INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
(Dollars in thousands, except per share amounts)
(unaudited)
		Fourth Quarter								Year-to-Date
		14 and 13 Weeks Ended								53 and 52 Weeks Ended
		31-Dec-22				25-Dec-21				31-Dec-22				25-Dec-21
Net sales		$	1,131,516			$	963,278			$	4,345,250			$	3,501,575
Cost of sales			832,557				740,994				3,219,026				2,617,686
Gross profit			298,959				222,284				1,126,224				883,889
Selling, general, and administrative expenses			189,243				165,034				692,975				590,608
Impairment of goodwill and intangible assets			—				6,496				—				6,496
Operating income			109,716				50,754				433,249				286,785
Other income (expense)
Interest expense			(13,256	)			(11,146	)			(47,534	)			(42,612	)
Interest income			996				298				2,015				1,192
Gain (loss) on investments (unrealized)			932				364				(3,374	)			1,920
Loss from divestiture of offshore wind energy structures business			(33,273	)			—				(33,273	)			—
Other			4,268				2,501				12,805				12,798
Other income (expense), net			(40,333	)			(7,983	)			(69,361	)			(26,702	)
Earnings before income taxes			69,383				42,771				363,888				260,083
Income tax expense			28,156				15,092				108,687				61,414
Equity in earnings (loss) of nonconsolidated subsidiaries			(19	)			135				(950	)			(944	)
Net earnings			41,208				27,814				254,251				197,725
Less: Earnings attributable to non-controlling interests			(876	)			(958	)			(3,388	)			(2,095	)
Net earnings attributable to Valmont Industries, Inc.		$	40,332			$	26,856			$	250,863			$	195,630
Average shares outstanding (000's) - Basic			21,319				21,227				21,311				21,193
Earnings per share - Basic		$	1.89			$	1.27			$	11.77			$	9.23
Average shares outstanding (000's) - Diluted			21,656				21,523				21,580				21,493
Earnings per share - Diluted		$	1.86			$	1.25			$	11.62			$	9.10
Cash dividends per share		$	0.55			$	0.50			$	2.20			$	2.00

VALMONT INDUSTRIES, INC. AND SUBSIDIARIES
SUMMARY OPERATING RESULTS
(Dollars in thousands)
(Unaudited)
		Fourth Quarter								Year-to-Date
		14 and 13 Weeks Ended								53 and 52 Weeks Ended
		31-Dec-22				25-Dec-21				31-Dec-22				25-Dec-21
Net sales
Infrastructure		$	771,337			$	670,481			$	2,928,419			$	2,372,100
Agriculture			335,066				276,757				1,346,672				1,028,717
Other			33,272				23,087				100,219				123,001
Total			1,139,675				970,325				4,375,310				3,523,818
Less: Intersegment sales			(8,159	)			(7,047	)			(30,060	)			(22,243	)
Total		$	1,131,516			$	963,278			$	4,345,250			$	3,501,575
Operating Income (Loss)
Infrastructure		$	99,591			$	77,253			$	354,499			$	273,598
Agriculture			40,484				28,560				179,263				137,027
Other			1,445				(31,268	)			2,259				(40,192	)
Corporate			(31,804	)			(23,791	)			(102,772	)			(83,648	)
Total		$	109,716			$	50,754			$	433,249			$	286,785

The backlog of orders for the principal products manufactured and marketed was $1,656.4 million at the end of the 2022 fiscal year and $1,621.9 at the end of the 2021 fiscal year. An order is reported in our backlog upon receipt of a purchase order from the customer or execution of a sales order contract. We anticipate that most of the 2022 backlog of orders will be filled during fiscal year 2023. At year-end, the segments with backlog were as follows (dollar amounts in millions):

		12/31/2022			12/25/2021
Infrastructure		$	1,339.1		$	1,086.3
Agriculture			317.3			471.0
Other			—			64.6
		$	1,656.4		$	1,621.9

Valmont has aggregated its business segments into two global reportable segments as follows.

Infrastructure: This segment consists of the manufacture and distribution of products and solutions to serve infrastructure markets of utility, renewable energy, lighting, transportation, and telecommunications, and coatings services to preserve metal products.

Agriculture: This segment consists of the manufacture of center pivot components and linear irrigation equipment for agricultural markets, including parts and tubular products, and advanced technology solutions for precision agriculture.

In addition to these two reportable segments, the Company had a business and related activities that is not more than 10% of consolidated sales, operating income, or assets. This includes the offshore wind energy structures business and was reported in the “Other” segment until its divestiture in 2022.

VALMONT INDUSTRIES, INC. AND SUBSIDIARIES
SUMMARY OPERATING RESULTS
(Dollars in thousands)
(Unaudited)
		Fourteen weeks ended December 31, 2022
											Intersegment
		Infrastructure			Agriculture			Other			Sales				Consolidated
Geographical market:
North America		$	588,867		$	202,560		$	—		$	(5,932	)		$	785,495
International			182,470			132,506			33,272			(2,227	)			346,021
Total		$	771,337		$	335,066		$	33,272		$	(8,159	)		$	1,131,516
Product line:
Transmission, Distribution, and Substation		$	302,444		$	—		$	—		$	—			$	302,444
Lighting and Transportation			239,453			—			—			—				239,453
Coatings			92,441			—			—			(4,032	)			88,409
Telecommunications			87,577			—			—			—				87,577
Renewable Energy			49,422			—			33,272			(2,228	)			80,466
Irrigation Equipment and Parts, excluding Technology			—			302,965			—			(1,899	)			301,066
Technology Products and Services			—			32,101			—			—				32,101
Total		$	771,337		$	335,066		$	33,272		$	(8,159	)		$	1,131,516
		Thirteen weeks ended December 25, 2021
											Intersegment
		Infrastructure			Agriculture			Other			Sales				Consolidated
Geographical market:
North America		$	478,019		$	150,478		$	—		$	(7,047	)		$	621,450
International			192,462			126,279			23,087			—				341,828
Total		$	670,481		$	276,757		$	23,087		$	(7,047	)		$	963,278
Product line:
Transmission, Distribution, and Substation		$	266,625		$	—		$	—		$	—			$	266,625
Lighting and Transportation			216,198			—			—			—				216,198
Coatings			77,747			—			—			(2,752	)			74,995
Telecommunications			75,697			—			—			—				75,697
Renewable Energy			34,214			—			23,087			—				57,301
Irrigation Equipment and Parts, excluding Technology			—			251,258			—			(4,295	)			246,963
Technology Products and Services			—			25,499			—			—				25,499
Total		$	670,481		$	276,757		$	23,087		$	(7,047	)		$	963,278

VALMONT INDUSTRIES, INC. AND SUBSIDIARIES
SUMMARY OPERATING RESULTS
(Dollars in thousands)
(Unaudited)
		Fifty-three weeks ended December 31, 2022
											Intersegment
		Infrastructure			Agriculture			Other			Sales				Consolidated
Geographical market:
North America		$	2,234,339		$	766,929		$	—		$	(26,248	)		$	2,975,020
International			694,080			579,743			100,219			(3,812	)			1,370,230
Total		$	2,928,419		$	1,346,672		$	100,219		$	(30,060	)		$	4,345,250
Product line:
Transmission, Distribution, and Substation		$	1,184,660		$	—		$	—		$	—			$	1,184,660
Lighting and Transportation			940,462			—			—			—				940,462
Coatings			356,707			—			—			(15,327	)			341,380
Telecommunications			320,342			—			—			—				320,342
Renewable Energy			126,248			—			100,219			(3,346	)			223,121
Irrigation Equipment and Parts, excluding Technology			—			1,231,587			—			(11,387	)			1,220,200
Technology Products and Services			—			115,085			—			—				115,085
Total		$	2,928,419		$	1,346,672		$	100,219		$	(30,060	)		$	4,345,250
		Fifty-two weeks ended December 25, 2021
											Intersegment
		Infrastructure			Agriculture			Other			Sales				Consolidated
Geographical market:
North America		$	1,724,531		$	545,574		$	—		$	(22,243	)		$	2,247,862
International			647,569			483,143			123,001			—				1,253,713
Total		$	2,372,100		$	1,028,717		$	123,001		$	(22,243	)		$	3,501,575
Product line:
Transmission, Distribution, and Substation		$	935,099		$	—		$	—		$	—			$	935,099
Lighting and Transportation			825,923			—			—			—				825,923
Coatings			309,647			—			—			(10,575	)			299,072
Telecommunications			238,527			—			—			—				238,527
Renewable Energy			62,904			—			123,001			—				185,905
Irrigation Equipment and Parts, excluding Technology			—			930,858			—			(11,668	)			919,190
Technology Products and Services			—			97,859			—			—				97,859
Total		$	2,372,100		$	1,028,717		$	123,001		$	(22,243	)		$	3,501,575

VALMONT INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
(unaudited)
		12/31/2022			12/25/2021
ASSETS
Current assets:
Cash and cash equivalents		$	185,406		$	177,232
Accounts receivable, net			604,181			571,593
Inventories			728,762			728,834
Contract assets - costs and profits in excess of billings			174,539			142,643
Prepaid expenses and other assets			87,697			83,646
Refundable income taxes			—			8,815
Total current assets			1,780,585			1,712,763
Property, plant, and equipment, net			595,578			598,605
Goodwill and other assets			1,180,833			1,135,881
		$	3,556,996		$	3,447,249
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current installments of long-term debt		$	1,194		$	4,884
Notes payable to banks			5,846			13,439
Accounts payable			360,312			347,841
Accrued expenses			248,320			253,330
Contract liabilities - billings in excess of costs and earnings			172,915			135,746
Income taxes payable			3,664			—
Dividends payable			11,742			10,616
Total current liabilities			803,993			765,856
Long-term debt, excluding current installments			870,935			947,072
Operating lease liabilities			155,469			147,759
Other long-term liabilities			84,887			172,965
Shareholders' equity			1,641,712			1,413,597
		$	3,556,996		$	3,447,249

VALMONT INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
(unaudited)
		53 Weeks Ended				52 Weeks Ended
		31-Dec-22				25-Dec-21
Cash flows from operating activities
Net Earnings		$	254,251			$	197,725
Depreciation and amortization			97,167				92,577
Impairment of long-lived assets			—				27,911
Contribution to defined benefit pension plan			(17,155	)			(1,924	)
Loss on sale of offshore wind energy structures business			33,273				—
Change in working capital			(56,092	)			(284,739	)
Other			14,821				34,388
Net cash flows from operating activities			326,265				65,938
Cash flows from investing activities
Purchase of property, plant, and equipment			(93,288	)			(107,790	)
Acquisitions			(39,287	)			(312,500	)
Other			495				2,982
Net cash flows from investing activities			(132,080	)			(417,308	)
Cash flows from financing activities
Proceeds from long-term borrowings			253,999				312,485
Principal payments on long-term borrowings			(336,403	)			(91,313	)
Net payments on short-term borrowings			(7,577	)			(20,241	)
Purchase of treasury shares			(40,474	)			(26,100	)
Dividends to noncontrolling interests			(714	)			—
Purchase of noncontrolling interests			(7,338	)			—
Dividends paid			(45,813	)			(41,412	)
Other			2,415				81
Net cash flows from financing activities			(181,905	)			133,500
Effect of exchange rates on cash and cash equivalents			(4,106	)			(5,624	)
Net change in cash and cash equivalents			8,174				(223,494	)
Cash and cash equivalents - beginning of year			177,232				400,726
Cash and cash equivalents - end of period		$	185,406			$	177,232

VALMONT INDUSTRIES, INC. AND SUBSIDIARIES
SUMMARY OF EFFECT OF SIGNIFICANT NON-RECURRING ITEMS ON REPORTED RESULTS
REGULATION G RECONCILIATION
(Dollars in thousands, except per share amounts)
(unaudited)

The non-GAAP tables below disclose the impact of the loss from the divestiture of the offshore wind energy structures business on fiscal 2022 results. Further, the non-GAAP tables below disclose the impact of intangible asset amortization (Prospera) and stock-based compensation recognized for the Prospera employees on fiscal 2022 and 2021 results. We believe the adjustments for Prospera allow for a better investor understanding of Agriculture segment performance related to traditional segment products. The non-GAAP tables below also disclose the impact of the nonrecurring impairment of long-lived assets for the offshore wind energy structures business, a write off a receivable following arbitration of a commercial transaction from 2014, acquisition diligence, severance expenses on segment operating income and net earnings, as well as the impact of the U.K. tax rate change on net earnings (adjusts GAAP tax rate from 19.0% to 22.5%) on fiscal 2021 results. Amounts may be impacted by rounding. We believe it is useful when considering company performance for the non-GAAP adjusted net earnings and operating income to be taken into consideration by management and investors with the related reported GAAP measures.

		Fourteen				Diluted				Fifty-three				Diluted
		weeks ended				earnings per				weeks ended				earnings per
		December 31, 2022				share				December 31, 2022				share
Net earnings attributable to Valmont Industries, Inc. - as reported		$	40,332			$	1.86			$	250,863			$	11.62
Loss from divestiture of offshore wind energy structures business			33,273				1.54				33,273				1.54
Prospera intangible asset amortization			1,645				0.08				6,580				0.30
Stock-based compensation - Prospera			2,373				0.11				9,896				0.46
Total Adjustments, pre-tax1			37,291				1.72				49,749				2.31
Tax effect of adjustments2			(367	)			(0.02	)			(2,473	)			(0.11	)
Net earnings attributable to Valmont Industries, Inc. - Adjusted1		$	77,256			$	3.57			$	298,139			$	13.82
Average shares outstanding (000’s) - Diluted							21,656								21,580
		Thirteen				Diluted				Fifty-two				Diluted
		weeks ended				earnings per				weeks ended				earnings per
		December 25, 2021				share				December 25, 2021				share
Net earnings attributable to Valmont Industries, Inc. - as reported		$	26,856			$	1.25			$	195,630			$	9.10
Impairment of long-lived assets - offshore wind energy structures business			27,911				1.30				27,911				1.30
Prospera intangible asset amortization			1,470				0.07				3,396				0.16
Stock-based compensation - Prospera			2,928				0.14				5,240				0.24
Write-off of a receivable, pre-tax			—				—				5,545				0.26
Acquisition diligence expense, pre-tax			—				—				1,120				0.05
Severance expense, pre-tax			2,492				0.12				4,052				0.19
Total Adjustments, pre-tax1			34,801				1.62				47,264				2.20
Change in U.K. statutory tax rate			—				—				(2,819	)			(0.13	)
Valuation allowance against offshore wind energy structures business' tax assets			5,076				0.24				5,076				0.24
Tax effect of adjustments2			(7,982	)			(0.37	)			(10,340	)			(0.48	)
Net earnings attributable to Valmont Industries, Inc. - Adjusted1		$	58,751			$	2.73			$	234,811			$	10.92
Average shares outstanding (000’s) - Diluted							21,523								21,493
1Earnings per share includes rounding
2The tax effect of adjustments is calculated based on the income tax rate in each applicable jurisdiction.

		Fourteen weeks ended December 31, 2022
Operating Income Reconciliation		Infrastructure				Agriculture				Other				Corporate				Valmont
Operating income - as reported		$	99,591			$	40,484			$	1,445			$	(31,804	)		$	109,716
Stock-based compensation - Prospera			—				2,373				—				—				2,373
Prospera intangible asset amortization			—				1,645				—				—				1,645
Adjusted Operating Income		$	99,591			$	44,502			$	1,445			$	(31,804	)		$	113,734
Net Sales - as reported			765,077				333,167				33,272				NM				1,131,516
Operating Income as a % of Net Sales			13.0	%			12.2	%			4.3	%			NM				9.7	%
Adj. Operating Income as a % of Net Sales			13.0	%			13.4	%			4.3	%			NM				10.1	%
		Thirteen weeks ended December 25, 2021
Operating Income Reconciliation		Infrastructure				Agriculture				Other				Corporate				Valmont
Operating income - as reported		$	77,253			$	28,560			$	(31,268	)		$	(23,791	)		$	50,754
Impairment of long-lived assets			—				—				27,911				—				27,911
Stock-based compensation			—				2,928				—				—				2,928
Prospera intangible asset amortization			—				1,470				—				—				1,470
Severance expense, pre-tax			500				—				1,992				—				2,492
Adjusted Operating Income		$	77,753			$	32,958			$	(1,365	)		$	(23,791	)		$	85,555
Net Sales - as reported			667,728				272,463				23,087				NM				963,278
Operating Income as a % of Net Sales			11.6	%			10.5	%			(135.4	)%			NM				5.3	%
Adj. Operating Income as a % of Net Sales			11.6	%			12.1	%			(5.9	)%			NM				8.9	%
		Fifty-three weeks ended December 31, 2022
Operating Income Reconciliation		Infrastructure				Agriculture				Other				Corporate				Valmont
Operating income - as reported		$	354,499			$	179,263			$	2,259			$	(102,772	)		$	433,249
Stock-based compensation - Prospera			—				9,896				—				—				9,896
Prospera intangible asset amortization			—				6,580				—				—				6,580
Adjusted Operating Income		$	354,499			$	195,739			$	2,259			$	(102,772	)		$	449,725
Net Sales - as reported			2,909,746				1,335,285				100,219				NM				4,345,250
Operating Income as a % of Net Sales			12.2	%			13.4	%			2.3	%			NM				10.0	%
Adj. Operating Income as a % of Net Sales			12.2	%			14.7	%			2.3	%			NM				10.3	%
		Fifty-two weeks ended December 25, 2021
Operating Income Reconciliation		Infrastructure				Agriculture				Other				Corporate				Valmont
Operating income - as reported		$	273,598			$	137,027			$	(40,192	)		$	(83,648	)		$	286,785
Impairment of long-lived assets			—				—				27,911				—				27,911
Prospera intangible asset amortization			—				3,396				—				—				3,396
Stock-based compensation - Prospera			—				5,240				—				—				5,240
Write-off of a receivable, pre-tax			—				—				5,545				—				5,545
Acquisition diligence expense, pre-tax			—				—				—				1,120				1,120
Severance expense, pre-tax			500				910				2,642				—				4,052
Adjusted Operating Income		$	274,098			$	146,573			$	(4,094	)		$	(82,528	)		$	334,049
Net Sales - as reported			2,361,524				1,017,050				123,001				NM				3,501,575
Operating Income as a % of Net Sales			11.6	%			13.5	%			(32.7	)%			NM				8.2	%
Adj. Operating Income as a % of Net Sales			11.6	%			14.4	%			(3.3	)%			NM				9.5	%

VALMONT INDUSTRIES, INC. AND SUBSIDIARIES
REGULATION G RECONCILIATION OF ADJUSTED RETURN ON INVESTED CAPITAL
(Dollars in thousands)
(unaudited)

Return on Invested Capital is a non-GAAP measure. Accordingly, Invested Capital and Return on Invested Capital should not be considered in isolation or as a substitute for net earnings, cash flows from operations or other income or cash flow data prepared in accordance with GAAP, or as a measure of our operating performance or liquidity. The table below shows how Invested Capital and Return on Invested Capital are calculated from our income statement and balance sheet. Return on Invested Capital is calculated as Operating Income (after-tax) divided by average of beginning and ending Invested Capital. Invested Capital represents total assets minus total liabilities (excluding interest-bearing debt). Return on Invested Capital is one of our key operating ratios, as it allows investors to analyze our operating performance in light of the amount of investment required to generate our operating profit. Return on Invested Capital is also a measure used to determine management incentives.

		2022
Operating income		$	433,249
Adjusted effective tax rate1			27.7	%
Tax effect on operating income			(119,872	)
After-tax operating income			313,377
Average invested capital			2,437,232
Return on invested capital			12.9	%
Adjusted operating income			449,725
Adjusted effective tax rate1			27.7	%
Tax effect on operating income			(124,431	)
After-tax operating income			325,294
Average invested capital			2,437,232
Adjusted return on invested capital			13.3	%
Total assets			3,556,996
Less: Accounts payable			(360,312	)
Less: Accrued expenses			(248,320	)
Less: Income taxes payable			(3,664	)
Less: Defined benefit pension asset			(24,216	)
Less: Deferred compensation			(30,316	)
Less: Other noncurrent liabilities			(13,480	)
Less: Dividends payable			(11,742	)
Less: Lease liability			(155,469	)
Less: Contract liability			(172,915	)
Less: Deferred tax liability			(41,091	)
Total invested capital		$	2,495,471
Beginning of year invested capital		$	2,378,992
Average invested capital		$	2,437,232

1The adjusted effective tax rate for 2022 excludes the $33,273 loss from divestiture of the offshore wind energy structures business which is not deductible for tax purposes. The effective tax rate including the loss on the divestiture is 29.9%.

Return on invested capital, as presented, may not be comparable to similarly titled measures of other companies.

VALMONT INDUSTRIES, INC. AND SUBSIDIARIES
REGULATION G RECONCILIATION OF FORECASTED GAAP AND ADJUSTED EARNINGS
(Dollars in thousands, except per share amounts)

The non-GAAP tables below disclose the impact on the range of estimated diluted earnings per share of the (1) amortization of the intangible asset (Prospera) and (2) stock-based compensation for Prospera employees. We believe the adjustments for Prospera allow for a better investor understanding of Agriculture segment performance related to traditional segment products. We believe it is useful when considering company performance for the non-GAAP adjusted net earnings to be taken into consideration by management and investors with the related reported GAAP measures.

Reconciliation of Range of Net Earnings - 2023 Guidance		Low End			High End			Adjustments
Estimated net earnings - GAAP		$	318,900		$	330,800
Prospera intangible asset (proprietary technology) amortization, pre-tax									6,700
Stock-based compensation - Prospera, pre-tax									10,000
Total pre-tax adjustments									16,700
Estimated tax benefit from above expenses*									(2,500	)
Total Adjustments, after-tax								$	14,200
Estimated net earnings - Adjusted		$	333,100		$	345,000
Diluted Earnings Per Share Range - GAAP		$	14.70		$	15.25
Diluted Earnings Per Share Range - Adjusted		$	15.35		$	15.90
* The tax effect of adjustments is calculated based on the estimated income tax rate in each applicable jurisdiction.

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20230222005859/en/

Renee Campbell

renee.campbell@valmont.com

Source: Valmont Industries, Inc.

FAQ

What were Valmont Industries' Q4 2022 net sales?

Valmont Industries reported Q4 2022 net sales of $1.1 billion, a 17.5% increase year-over-year.

What was the diluted EPS for Valmont Industries in Q4 2022?

The diluted EPS for Valmont Industries in Q4 2022 was $1.86, reflecting a 48.8% increase compared to the previous year.

What is Valmont Industries' 2023 earnings outlook?

Valmont Industries projects net sales growth of 4% to 7% and diluted EPS between $14.70 and $15.25 for 2023.

How did Valmont Industries perform in FY 2022?

In FY 2022, Valmont Industries achieved record net sales of $4.3 billion, a 24.1% increase from FY 2021.

What was the operating income for Valmont Industries in Q4 2022?

Valmont Industries' operating income for Q4 2022 was $109.7 million, an increase of 116.2% year-over-year.